Daily readers of Today in Food likely have noticed a trend in our Washington section over the past few years. From Hershey's to McCormick Spices and seemingly every company in between, food and beverage producers are contending with class-action lawsuits that cover everything from false health claims to consumer fraud to slack fill. And it doesn't seem to be stopping.
Just today, we reported on a potential class-action lawsuit against Illinois-based McDonald's operator Karis Management Co. alleging that cheeseburger "Extra Value Meals" actually cost more than if the items themselves were purchased separately. Last week, we reported on a suit that alleges Newman's Own Inc. mislabeled its pasta sauce as all-natural.
Although judges sometimes agree with defendants who call the claims meritless, the numbers are pretty clear: filings of such class-action lawsuits against food and beverage industry companies are on the rise since 2008. According to food litigation group Perkins Coie LLP, there were 114 recorded cases in 2016 involving food and beverage companies as of October. It also tracked a rise from 19 cases in 2008 to 158 cases in 2015, reported Forbes (Dec. 21).
According to David Biderman, a partner at Perkins Coie, food-related class-actions really took off in 2012. Figures nearly doubled that year, from 53 in 2011 to 95 in 2012. Mr. Biderman notes that the U.S. Supreme Court decision in AT&T Mobility v. Concepcion ruled that companies could enforce contracts that barred class-action lawsuits. As a result, the plaintiffs bar shifted into the food arena.
According to Yvonne McKenzie at Pepper Hamilton LLP, there a number of reasons for this shift. She noted that FDA hasn't regulated certain issues, like the definition of "natural," opening the door for suits. She also noted that food companies in general have the funds necessary to go through litigation, making them a target for some lawyers. According to Ms. McKenzie:
"Courts, I think, by in large, are somewhat reticent to get rid of these cases and grant that motion to dismiss early on...It then whets plaintiffs attorneys' appetite for more litigation...They think, well, if I can get past that motion to dismiss and I can get to the discovery phase, then I have leverage and I’m more likely to get paid at the end of the day."
It seems likely that such class-actions will continue in the New Year. To protect yourself and your food business, make sure to purchase a copy of The Food Institute and OFW Law's A Primer about the Ongoing Epidemic of Class Action Lawsuits Challenging Food Claims here: https://www.foodinstitute.com/catalog/product/lawsuit_primer_2015.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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